Centralized government allocates resources badly—regardless of its intentions. The very nature of centralization makes it impossible to collect and compute all the information that is needed. This is as true for any grand scheme of industrial planning as it is for the government-led welfare systems that characterize Europe's "social model."
AM: As the article explains, this applies to both hard central planning, and softer forms of "social democracy." We are seeing the results in Europe.
Perhaps so. But does not decentralization lead to a weaker state. The weaker the central government, the less invasive the tax system, and so on, the more likelihood that there will be rebellions and uprisings and breakdown in the political structure. Is this not true? So while 'social democracy' may seem ineffective because it is not efficient at distributing wealth and keeping the economy running at a healthy level, the citizens are, for the most part, not killing each other because they still believe in the central government and its ability to somehow do good.
ReplyDeleteGood point: but I think it is certainly possible to reduce the redistributive and regulatory parts of government without necessarily weakening things like rule of law, policing, and property rights that lead to rebellion and violence.
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